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Media and Entertainment

The Media and Entertainment (M & E) industry in India is essentially based in Maharashtra. Mumbai is the nerve centre of the widely popular Hindi film industry, and Pune serves as the key centre for the entertainment industry. Mumbai houses the country's first Imax dome theatre. The famous film studios like Film City in Goregaon, Natraj in Andheri, and RK Studio in Chembur are all located in Mumbai. The renowned Film and Television Institute (FTII) is located in Pune. Established in 1960 on the erstwhile Prabhat studio premises, the FTII is one of the oldest and finest institutes in the field of training in film making and television programme production.

The media and entertainment (M & E) industry continues to outperform the country’s growth rate. For the quarter January to March, 2008, it is estimated that the industry registered a growth of 14.86% in revenues compared to the corresponding quarter of previous year. This is mainly due to the increase in revenues that came from advertising and television, the print media and the music industry also contributed significantly to the total revenues of the industry. The net profit margin (NPM) for the quarter improved from 18.88% to 23.95%. The operating profit jumped from Rs 559.94 crore to Rs 668.03 crore, which is almost 19.30% more than the previous year. The operating profit margin increased from 33.86% of last year to 35.17%.

Cygnus Business Consultant, a Hyderabad-based research firm, estimates that the domestic entertainment and media industry will record a cumulative annual growth of 18% over the next four years to reach a size of Rs 1,15,700 crore.

Television Industry

Amongst the segments of the industry, the television industry segment will continue to contribute the largest share as in the last three years. The television industry revenues are expected to grow Rs.519 billion by 2011, implying a 22 percent cumulative annual growth over the next few years. Subscription revenues are projected to be the key growth driver for the Indian television industry over the next five years. Subscription revenues will increase both from the number of pay TV homes as well as increased subscription rates. The buoyancy of the Indian economy will drive the homes, both in rural and urban (second TV set homes) areas to buy televisions and subscribe for the pay services. New distribution platforms like DTH and IPTV will only increase the subscriber base and push up the subscription revenues.

Filmed Entertainment

The Indian Filmed Entertainment industry is projected to grow to Rs. 175 billion by 2011, implying a 16 percent cumulative annual growth over the next five years. Indians love to watch movies. Advancements in technology are helping the Indian film industry in all the spheres – film production film exhibition and marketing. The industry is getting increasingly corporatized several film production, distribution and exhibition companies are coming out with initiatives to set up more digital cinema halls in the country are already underway. This will not only improve the quality of prints and thereby make film viewing a more pleasurable experience, but also reduce piracy of prints. More theatres across the country are getting upgraded to multiplexes.

Radio

The Radio industry, fuelled by the positive FM-II Radio Policy is projected to grow to Rs. 17 billion by 2011, implying a 28 percent cumulative annual growth over the period of years. The cheapest and oldest form of entertainment in the country, which was hitherto dominated by the AIR, is going to witness a seachange very shortly. In 2005, the Government opened up the sector to foreign investment along with migration to a revenue-share scheme. These factors along with privatization of a large number of frequencies as part of the FM II Radio Policy will drive growth in this sector. As many as 338 licenses were given out by the Indian government for FM radio channels in 91 big and small towns and cities. This deluge of radio stations results in opportunities for content and trained talent. New concepts like satellite radio, visual radio and community radio have also begun to hit the market. Increasingly, radio is making a comeback in the lifestyles of Indians.

Music

While physical sales in the music industry continue to be hampered by piracy and falling prices, digital music has witnessed a surge that will propel this industry in the next few years. The music industry is expected to grow at the rate of a CAGR of 4% in the next few years propelling it to Rs. 8.7 billion by 2011 on an overall basis. The growth in Digital Music is expected to grow by 25 percent to Rs. 1.8 billion by 2011.

Convergence Trends in India

The term convergence describes two trends: the ability of different network platforms (broadcast, satellite, cable, and telecommunications) to carry similar kinds of services; and the merging of consumer devices such as telephones televisions, or PCs. From a technology perspective, the twin forces accelerating convergence are increased broadband penetration and increased standardization of networks and devices to use the Internet Protocol (IP). Convergence collapses previously distinct media distribution channels (for example, broadcast/cable television, radio, print, online) into a single media delivery chain. A converged infrastructure supports a range of interaction modes between users and content. Moreover, the open transport and interface protocols of IP mean that access to content has become largely network and device independent.

Fundamentally, convergence affects the two-step process at the heart of any media-based industry: content creation and transport. The first step entails selecting, packaging, and encoding content into a medium. The second step transports content to its destination and then decodes it for use. In most instances, it is the second step that defines a particular media market, which influences the form taken by the content in the first step. Content owners are both facilitators and beneficiaries of convergence. They make converged media experiences possible by offering consumers their content libraries in digital format through any access device and network. They benefit from convergence by serving consumers’ new media needs with the appropriate distribution and business models.

Digital Cinema Combination of three phases: digital production or postproduction, digital delivery and digital projection for enhanced movie viewing experience to audiences. Approx. 10% of about 12,000 movies theatres have turned digital with digital projectors and servers to run digital prints.

Ancillary revenues earned by film producers estimated to increase by 20 per centa year by selling their digital rights to mobile companies and satellite rights to TV broadcasters and distributors (cable companies and DTH players).

Mobile Ads are currently text-based and appear along with search results Delivered to mobile devices and they contain either a link to a mobile website or a phone number which users can click on to generate a call example Google has started testing mobile ads for advertisers in India.

Mobile VAS Industry (excluding SMS) is thriving on Ringtones and Ringbacktones, which are the primary revenue drivers. Voice based and Text based information services are also significant. Mobile Music and Mobile Gaming market is small but is expected to grow faster than other services.

IPTV is set to pose a significant challenge to established cable and DTH operators with its ‘Triple Play’ promise of high-speed Internet, television (video on demand or regular broadcasts) and telephone service over a single broadband connection. Launched by MTNL last year, other operators like Bharti and Reliance are also undergoing trials.

Mobile TV : It works by receiving a digital TV broadcast signal optimized for mobile devices in much the same way as televisions do at home. Operators and broadcasters have to put up towers across cities. Nokia has tied up with Doordarshan, the State Broadcaster, to conduct a pilot test using digital video broadcaster-handheld (DVB-H) technology for rollout of services. Trials are also being conducted by Mobile Operators.

Mobile Operators and Movie hall chains have started tying up for purchase and payment of movie tickets through mobile. E.g. AirTel tie up with PVR Cinemas for mobile ticketing services.

Equipment vendor Nokia has tied up with a Film training institute and announced a Mobile Film Award aimed at promotion of a new mobile model that will judge entries for short movies produced using the particular handset model.

Current Market trends

Walt Disney investing US$ 202.2 million in UTV : Walt Disney has offered to invest Rs 805 crore to increase its stake to 32.1 per cent in media and entertainment company UTV. The California-based family entertainment and media enterprise, at present, has 13.7 per cent stake in UTV.

Modern multiplexes redefine experience : Adlabs Cinemas, an arm of the Reliance-Anil Dhirubhai Ambani Group's Adlabs Films Ltd, is raising the stakes in the battle for cinema goers' wallets by launching a chain of stand-alone luxury lounges centered on film. The cinema chain will open up to a dozen independent 6,000-10,000 sq. ft lounges over the next year, loosely based around the concept of its existing "ebony lounge" format that offers audiences reclining leather chairs and waiter service. Adlabs has also launched India’s first "6D cinema” in Agra, allowing audiences the simultaneous experience of sight, smell, sound, touch and motion.

Fame limited plans : to open at least six so-called gold class lounges within multiplexes this year, in addition to the four it runs currently.

India's Reliance Entertainment in Hollywood deal : Reliance Entertainment, a unit of Reliance ADA group, controlled by billionaire Anil Ambani said it has signed deals with eight Hollywood production houses, as it seeks a bigger global presence. The deals are with production houses including George Clooney's Smokehouse Productions, Tom Hanks' Playtone Productions, Brad Pitt's Plan B Entertainment, Chris Columbus' 1492 Pictures and Nicolas Cage's Saturn Productions.

India leisure and entertainment trends report 2008 : The study being carried out by The Knowledge Company, a division of Technopak. The study shows fun is very serious business today and there is a blurring of lines between leisure and destressing. While TV viewing is the most favorite past time with 75% indulging in it, music too has become very popular with the coming of FM.

Move over multiplexes - now megaplexes are here : Adlabs Cinemas has drawn up a plan to build 12 megaplexes in India where you can not only see movies but also cricket and soccer matches on screen! Unlike five to six screen multiplexes,15 the megaplexes will have 11 to 15 screens with a seating capacity to accommodate 4,000 to 5,000 people in each of them

Corporates float funds to capitalize on film boom : With over 250 films releasing a year and that number growing continuously entertainment companies are floating film funds, to finance film productions or buy film rights, to capitalize on the boom in film-making. The first such film funds was the Indian Film Company (IFC) set up by Network18. IFC is an investments and intellectual property rights firm, which last year raised over Rs 445 crore from the Alternative Investment Market of the London Stock Exchange. Now others, among them Pyramid Saimira, Australia’s Charter Pacific Corporation Cinevistaas, and a group of Bollywood financiers, are joining the bandwagon Chennai-based Pyramid Saimira Theatre, a production to multiplex company, plans to float a film fund of around Rs 250-300 crore this year.

Mobile TV : The next big thing: Indians are now warming up to the idea of mobile television (TV), according to a recent report by Springboard Research that predicts 12 million subscribers will use the mobile TV service in the first year of its launch. Currently in India, only Doordarshan offers mobile TV service, however according to the report, in recent months the market has seen increased activities from various stakeholders including technology providers, network equipment vendors and mobile service providers like Nokia, Spice Telecom, Qualcomm and Samsung.

Warner Bros Motion Picture in pact with Prime Focus : Warner Bros Motion Picture Imaging (MPI), the Hollywood studio's 4k post production facility, with films like Ocean's 13 to its credit, has entered into a strategic alliance with Prime Focus, the India-based post production house with operations in UK US, Canada and India. The tie-up will allow both companies to move content seamlessly from facility to facility using the most cost efficient method, which will allow them to process work in the time zone that most closely meets individual filmmaker's needs and schedules.

Digital TV to become more popular by 2010 : The domestic television market is moving towards digital platforms. By 2010 28 per cent of the estimated 100 million pay TV households will migrate to digital pay TV platforms such as digital cable, DTH (direct-to-home) and IPTV (internet protocol TV). DTH may emerge as the leader among the digital platforms in the next three years, said an Ernst & Young report - "India Digital Revolution: Impact on Film & Television" - released at the Assocham global summit on the media and entertainment industry in Delhi. The report expects India's television advertising market to grow by 14 per cent annually for the next three years. According to the report, by 2010, 28 per cent of the 100 million pay TV households will switch over to digital TV platforms.

Indian music labels gear-up for online sales : Music industry bigwigs like Sony BMG, Saregama India, and T-Series have made a total of over 5 million tracks available on their own websites and other portals for full song downloads in a bid to monetize their content through the internet, and fight piracy. Saregama India, for instance, has been test marketing the service for over two months now. By December end, it plans to make available 4.6 million tracks it has acquired, apart from the 0.3 million music tracks it owns under its banner. The songs will be available on the company-owned website for around Rs 12 for five minutes. TSeries and Sony BMG too are in the race, and Tips is expected to soon join the pack. While some music companies have the tracks loaded on their own portals, others like T- Series and Sony BMG have their tracks available in association with other portals like MSN, Sony Connect, and Hungama Mobiles among other portals. In most cases, the pricing for Internet downloads vary.

Major Players in the Film Industry

Adlabs

Adlabs is by far the largest entertainment conglomerate in the country. Thought leaders in every sense of the word, we are the defining force in every sphere of the entertainment industry production, distribution, processing or in cinemas - having started as a laboratory for processing ad films over three decades ago. Be it pioneering the concept of multiplexes, giving a corporate face to movie making, or introducing the IMAX experience, it has always been Adlabs first – in short, 'never a dull moment' for the industry. June 2005 marked the milestone in Adlabs when Reliance ADAG stepped into the company and became majority promoter shareholders. With this move Adlabs was catapulted to being part of one of the leading business groups in India with a combined market capitalization exceeding one lakh crore.

Mukta Arts

Started 28 years ago, Mukta Arts is one of the most reputed companies in the Indian entertainment industry and has pioneered many firsts, which has been a benchmark for other companies in this sector. Mr. Subhash Ghai, the name behind Mukta Arts and an institution in him, is the founder and creative head of the company, the present business of Mukta is the generation and distribution of contents for the entertainment industry. It has to its credit a long list of commercially successful Hindi films. These films have been extensively appreciated by the audiences both in India and overseas. These films also have considerable archival value, which ensures a steady flow of revenue into the company. During the last 28 years, the company has produced over 20 films and growing, all of which have generated tremendous profits for the company. Most of these films have been directed by Mr. Ghai and some of them are amongst the most popular Hindi films in recent times. Films like Karz, Hero, Karma, Ram Lakhan, Saaudagar, Khalnayak, Pardes, Taal and Yaadein are memorable blockbusters.

Yash Raj Films

YRF Studios started out as a film-making company in 1970. In the last three decades it has grown from strength to strength and today has to its credit India’s most enviable film catalogue – some films of which have been the highest grosser in the entertainment business. YRF Studios has also been involved in production of television software, ad films, music videos and documentaries. YRF Studios has its own Post-production facilities, Television Division, Design Cell, and Equipment Division, Marketing Division, Internet & New Media Division, Licensing & Merchandising Division – all in-house facilities, which make it one of the most coveted creative houses in the country. Collectively, 12 of the recent YRF productions have grossed in excess of 200 Million US Dollars worldwide. The 6 highest selling music albums of all times include 4 YRF productions.

Shringar Films

In the value chain of film making, Production, Distribution and Exhibition are the three key segments, of which, the distributor is the key stake holder. Shringar Films Limited, one of the leading film distributors in India. SFL was founded in 1999 and it took over the business of Shringar Films which was founded in 1975, a partnership firm of the Promoters, with the objective of bringing in the highest quality of entertainment to Indian movie audience.

Pritish Nandy Communications

Pritish Nandy Communications is one of the first corporate entities in Bollywood. Founded by Pritish Nandy, well-known poet and journalist, PNC has been professionally managed from its very inception. It was one of the first media and entertainment companies to go public in 2000, when it listed on India’s two best known stock exchanges, the BSE and the NSE, where it is among the few listed stocks in the sector. Well known global funds like Soros, Oppenheimer Alliance and Lloyd George hold PNC stock.

Key Challenges

Though the Entertainment and Media industry is growing in leaps and bounds, the full potential is yet to be tapped. One of the ways of realizing the potential is not only the removal of certain obstacles in the industry but also the provision of certain incentives to key segments of the industry in order to fuel the industry growth drivers further and thereby realize its full potential. Some of the recommendations as provided are as below:

Digitalization of Television Networks

India, today, does not have a national digital policy or plan. Though the regulator TRAI came out with recommendations for digitalization of cable networks, there are several more measures that are required to be taken in order for the industry to truly benefit from Digitalization :
Conversion to digitalization should be mandatory and not left on a completely voluntary basis
A clear time frame needs to be defined for transition to digital including a launch date and a sunset date
Licensing process for allocation of spectrum should be made stringent to subscriber base, area of operation etc.
Fiscal incentives such as waiver of service and entertainment tax, income tax holiday, etc. to be provided to operators for transition to digital.

Uniform Entertainment Tax across all states

Since levy of entertainment tax and regulation of cinemas is a State subject, the Centre presently has a limited role to play. The long-standing demand of the film industry is to shift ‘Entertainment and Media’ from the State List to the Concurrent List through a constitutional amendment. This will enable uniform policies for Cinema Construction Bye-laws and Entertainment tax. There is a need to implement uniform tax policies across the country, to enable standardized growth. The recommendation is to have a uniform Entertainment tax so as to stop reportage of short box office collections resulting in a loss to the ex-chequer.

Customs Duty

Customs duty is levied on import of equipment and other hardware used in the production and post production of filmed entertainment programmes. At a time when India is trying to position itself as a hub for production of entertainment and. competing in the International market on an equal footing, the necessary infrastructure and equipment is of vital importance. To provide impetus to the technological up gradation of facilities and infrastructure, the necessary equipment and hardware must be allowed to be imported without the additional burden of customs duty.

Multiplexes

An Income Tax Concession under Sec. 80 –1B of the income tax act was introduced with effect from 1st April 2002, allowing Multiplexes commissioning before 31st March 2005, an income tax rebate to the extent of 50% on book profits. It is requested that this concession be reintroduced so as to enable growth of exhibition sector in the country.

Piracy

As India moves into knowledge based economy, a strong Intellectual Property regime which provides adequate safeguards to the holder of copyright becomes increasingly important. The menace of piracy is rapidly eating away into the foundations of the entertainment industry. The piracy issue should be handled at three levels; Policy, Enforcement and Prosecution. The Industry recommends allocation of specific funds to fight piracy of entertainment content. This fund should be utilized in Advocacy and awareness of the piracy issue and also enforcement & legal matters.

Export Promotion

To promote Brand India, it is important that Indian companies and producers participate in global festivals and markets such as the Cannes & Berlin Film Festivals, MIPCOM, MIDEM, MIPTV, IBC, NATPE, NAB, Interbee, AFM and CASBAA under a common India umbrella. The Ministry of Information and Broadcasting has taken initiative by deciding to set up the task force with the specific aim of export promotion. This council supported by adequate funding will act as a catalyst for exponential growth in exports of Indian Entertainment and Media Industry.

Co- Production Treaties

Signing of Co-production Treaty with Canada, UK is already being looked at by the Information and Broadcasting Ministry. The Industry recommends that the Government takes on further initiatives to enter into more such treaties with many more countries so as to provide a further boost to the Indian Film industry.

Education & Training

The Entertainment and Media industry today faces an acute shortage of professionals. It is recommended that suitable incentives should be provided by the Government for setting up polytechnics, institutes and film schools. It is recommended that existing universities should include Film, Broadcast, Event Management and Digital technology in their curriculum. Similarly, institutes of Higher Learning like the IITs and the IIMs should be encouraged to offer LD are encouraged to offer specialization in Media & Entertainment.

Single window clearance for shooting in India

Today, India lacks a single-window clearance system not only for the Entertainment and Media Industry but for other industries as well. Setting-up of such a system could prove to be a great revenue earner for the country as a hub for production of entertainment content.

Source:
www.ibef.org
Kavan Bhandary